1 00:00:00,000 --> 00:00:14,040 Welcome back to the rate of change with York Wealth Management. 2 00:00:14,040 --> 00:00:17,960 As advisors to some of the wealthiest families in the country, the Ready Change is a podcast 3 00:00:17,960 --> 00:00:22,040 designed to help you in the pursuit of building long-term wealth through the insights of some 4 00:00:22,040 --> 00:00:24,520 of the brightest minds in asset management. 5 00:00:24,520 --> 00:00:28,360 I'm your host Murdoch Gaddi and in today's broadcast of speaking with Dan Winter and 6 00:00:28,360 --> 00:00:33,200 Rowan Grant, founders and portfolio managers at Arbor Capital. 7 00:00:33,200 --> 00:00:38,920 Arbor Capital is an investment firm focused on venture capital and growth equity investing 8 00:00:38,920 --> 00:00:41,920 within the SaaS and tech sector. 9 00:00:41,920 --> 00:00:47,940 They work with family offices and high-net-wealth individuals who are seeking to invest long-term 10 00:00:47,940 --> 00:00:53,120 patient capital in high-growth private businesses. 11 00:00:53,120 --> 00:00:59,360 Dan and Rowan share their journeys from entrepreneurs to family offices and to the establishment 12 00:00:59,360 --> 00:01:08,040 of the first fund in 2016, which at the time recording has achieved a gross investment 13 00:01:08,040 --> 00:01:13,840 rate of return of above 30% and multiple undeployed capital of more than 4x. 14 00:01:13,840 --> 00:01:20,680 For me, I enjoyed hearing how their journey has led to the evolution and the launch of 15 00:01:20,680 --> 00:01:29,240 the new fund, how it's shaped their new structure, their investment philosophy, and what they're 16 00:01:29,240 --> 00:01:34,820 looking for when investing and targeting private growth businesses. 17 00:01:34,820 --> 00:01:39,360 If you're about to take off for the Australia Day long weekend or you're enjoying a couple 18 00:01:39,360 --> 00:01:44,880 more weeks of fun in the sun, I hope you've had a great refreshing break and you're looking 19 00:01:44,880 --> 00:01:51,840 forward to pursuing a prosperous new year with the team here at the rate of change. 20 00:01:51,840 --> 00:01:56,120 With that being said, I hope you've enjoyed this conversation as much as I did, so sit 21 00:01:56,120 --> 00:02:08,560 back, relax, and enjoy it. 22 00:02:08,560 --> 00:02:13,600 Dan Winter and Rowan Grant, welcome to the Rate of Change with York Wealth Management. 23 00:02:13,600 --> 00:02:15,080 Thanks for having us, Murdoch. 24 00:02:15,080 --> 00:02:17,080 Hey, Murdoch, good to be here. 25 00:02:17,080 --> 00:02:20,960 Why don't we pick things off by telling us a little bit about yourselves and how you 26 00:02:20,960 --> 00:02:22,880 both got into financial markets. 27 00:02:22,880 --> 00:02:25,400 Dan, why don't you start things off? 28 00:02:25,400 --> 00:02:26,400 Sure. 29 00:02:26,400 --> 00:02:28,680 Maybe I'll give you a bit of my background. 30 00:02:28,680 --> 00:02:34,680 So I guess I studied international relations business at Bonn University on the Gold Coast 31 00:02:34,680 --> 00:02:41,200 and during my time studying, I guess I realized pretty quickly that I had a passion for technology 32 00:02:41,200 --> 00:02:43,160 and technology businesses. 33 00:02:43,160 --> 00:02:47,200 So I actually teamed up with a friend of mine and we started to build our own technology 34 00:02:47,200 --> 00:02:48,200 software. 35 00:02:48,200 --> 00:02:55,840 It was a really interesting experience, taught me a lot about tech and business and ultimately 36 00:02:55,840 --> 00:02:59,960 decided not to continue on with that venture. 37 00:02:59,960 --> 00:03:03,800 And actually went off to pursue management consulting to try and broaden my perspective 38 00:03:03,800 --> 00:03:07,840 and learn a bit more about big business and sort of how technology strategy, finance all 39 00:03:07,840 --> 00:03:09,720 came together. 40 00:03:09,720 --> 00:03:13,880 So quickly after graduating university, I went to management consultant for a firm called 41 00:03:13,880 --> 00:03:14,880 Accenture. 42 00:03:14,880 --> 00:03:20,600 I guess technically I was in technology and strategy consulting and did that for a few 43 00:03:20,600 --> 00:03:24,980 years where I learned exactly what I sort of had intended to get out of that, a lot 44 00:03:24,980 --> 00:03:29,840 about how big business operates, ASX listed companies and so on. 45 00:03:29,840 --> 00:03:35,520 And toward the sort of end of a couple of years there, I went back to the drawing board 46 00:03:35,520 --> 00:03:37,440 and I thought, what is the rest of my career? 47 00:03:37,440 --> 00:03:42,360 And for me, it felt like the right thing to do was to look at investing in technology, 48 00:03:42,360 --> 00:03:47,000 either becoming a founder again or to make a move into investment. 49 00:03:47,000 --> 00:03:53,880 So basically at the end of that journey, I joined a family office and worked in a small 50 00:03:53,880 --> 00:03:58,760 family office that was doing pre-seed and seed stage technology investing. 51 00:03:58,760 --> 00:04:03,760 At the same time, I met Rowan and we actually started our first fund together. 52 00:04:03,760 --> 00:04:08,880 So perhaps I'll pass to Rowan, he can tell you a bit about that and his background. 53 00:04:08,880 --> 00:04:09,880 Thanks, Dan. 54 00:04:09,880 --> 00:04:17,060 Yeah, Murdoch, I'm a recovering chartered accountant for my sins. 55 00:04:17,060 --> 00:04:21,120 Started life in business advisory and taxation. 56 00:04:21,120 --> 00:04:22,120 Didn't like it much. 57 00:04:22,120 --> 00:04:26,440 It was good like fundamental knowledge base to have and reading and understanding financial 58 00:04:26,440 --> 00:04:32,240 statements but couldn't see myself becoming a partner of the firm. 59 00:04:32,240 --> 00:04:38,400 Did a complete 180 and started a tech startup in the music space, like a consumer facing 60 00:04:38,400 --> 00:04:44,960 startup with no idea and no skills on how to do that, but learnt a lot. 61 00:04:44,960 --> 00:04:49,560 And that was sort of my entree to the tech space. 62 00:04:49,560 --> 00:04:54,540 And around the same time, I was getting mentored by CFO of a family office. 63 00:04:54,540 --> 00:04:58,520 And after that startup failed, joined that office. 64 00:04:58,520 --> 00:05:05,600 And that was sort of my then entree into private market investing. 65 00:05:05,600 --> 00:05:09,320 Stayed there for a while, really, really enjoyed it. 66 00:05:09,320 --> 00:05:15,480 And then had this really hard decision on whether to stick around and keep learning 67 00:05:15,480 --> 00:05:22,120 and expanding my network or go back down the entrepreneurial path and start a fund. 68 00:05:22,120 --> 00:05:28,000 And yeah, met Dan Winter around that time and decided, couldn't sort of put out the 69 00:05:28,000 --> 00:05:34,520 fire of that internal sort of optimism of an entrepreneur and decided to leave the family 70 00:05:34,520 --> 00:05:39,240 office and start a venture fund. 71 00:05:39,240 --> 00:05:44,540 It's pretty interesting the journey we all have to get to where we are today. 72 00:05:44,540 --> 00:05:46,800 It's not exactly a straight line, is it? 73 00:05:46,800 --> 00:05:53,280 No, it almost sounds like a smooth narrative, but it never is. 74 00:05:53,280 --> 00:05:58,080 The reason why I find that so interesting, you're saying Dan? 75 00:05:58,080 --> 00:06:01,000 Yeah, I was going to say definitely not in the case of myself. 76 00:06:01,000 --> 00:06:04,920 I thought I was going to end up working in the United Nations at one point and couldn't 77 00:06:04,920 --> 00:06:05,920 have ended. 78 00:06:05,920 --> 00:06:06,920 United Nations. 79 00:06:06,920 --> 00:06:10,640 Yeah, I know this is a podcast about managed finance and investing. 80 00:06:10,640 --> 00:06:14,920 But I need to know the story of United Nations in what sense? 81 00:06:14,920 --> 00:06:19,920 No, no, it was more an ambition, perhaps a far-fetched ambition. 82 00:06:19,920 --> 00:06:22,760 But at university, that was my interest. 83 00:06:22,760 --> 00:06:28,360 So I wanted to work in politics or international affairs in some capacity and pretty quickly 84 00:06:28,360 --> 00:06:32,680 realized that wasn't where I was going to land when my technology interest crept in. 85 00:06:32,680 --> 00:06:35,560 So I couldn't be further from it now. 86 00:06:35,560 --> 00:06:37,400 Don't worry, we all did it. 87 00:06:37,400 --> 00:06:39,460 And university, I want to become an architect. 88 00:06:39,460 --> 00:06:40,960 I was actually in the architecture faculty. 89 00:06:40,960 --> 00:06:42,560 You should have met half my mates. 90 00:06:42,560 --> 00:06:44,080 That were the Da Vinci's, the Michelangelo's. 91 00:06:44,080 --> 00:06:47,320 And I realized pretty quick, smart, that I needed my cab license because I was nowhere 92 00:06:47,320 --> 00:06:48,400 near as good. 93 00:06:48,400 --> 00:06:51,960 But yeah, how interesting. 94 00:06:51,960 --> 00:06:55,360 The other thing which we were discussing as well is what you guys do essentially, to my 95 00:06:55,360 --> 00:07:01,480 understanding, is you service the clientele which you service are high-end family offices. 96 00:07:01,480 --> 00:07:05,760 And do you guys want to talk a bit about, as you said with your upbringing, you guys 97 00:07:05,760 --> 00:07:08,460 have actually worked for family offices. 98 00:07:08,460 --> 00:07:14,440 So would you say that mentoring, working within these communities has given you essentially 99 00:07:14,440 --> 00:07:21,280 the understanding of what wealthy families look for in particular investments? 100 00:07:21,280 --> 00:07:25,760 Is that, and then essentially the managed fund is the vehicle about trying to put the 101 00:07:25,760 --> 00:07:26,760 two together? 102 00:07:26,760 --> 00:07:28,600 Do you want to talk a bit about that? 103 00:07:28,600 --> 00:07:31,400 Is that correct or have I got that completely wrong? 104 00:07:31,400 --> 00:07:33,080 I think you've done a good job of summarizing that actually. 105 00:07:33,080 --> 00:07:35,920 So both Rowan and I come from family office background in some capacity. 106 00:07:35,920 --> 00:07:39,640 Perhaps I'll talk a little bit about my experience there and then Rowan, you can talk about yours 107 00:07:39,640 --> 00:07:43,940 as well because despite having a lot of overlap in our careers, we've got very different experiences 108 00:07:43,940 --> 00:07:46,400 in terms of family office exposure. 109 00:07:46,400 --> 00:07:51,240 But for me, it was very eye-opening because I joined a family office that was looking 110 00:07:51,240 --> 00:07:53,840 at the earliest stage investing. 111 00:07:53,840 --> 00:07:59,760 So we're talking like napkin stage concept ideation stage companies where you're dealing 112 00:07:59,760 --> 00:08:03,160 with founders that have ideas and nothing else. 113 00:08:03,160 --> 00:08:08,960 And it's a very uncertain environment, teaches you a lot about picking founders and what 114 00:08:08,960 --> 00:08:15,040 to look for in people, I guess, more so than opportunities, but also how important it is 115 00:08:15,040 --> 00:08:20,600 to have well thought out business ideas that are backed up by sustainable business models. 116 00:08:20,600 --> 00:08:24,760 So I guess that part of the family office world, my early stage exposure is sort of 117 00:08:24,760 --> 00:08:30,400 partially what led Rowan and I to building Arbor Capital, which is where we are today. 118 00:08:30,400 --> 00:08:35,620 But then in addition to your point, like understanding how to manage money, learning sort of what's 119 00:08:35,620 --> 00:08:43,360 important from a LP standpoint and limited partner standpoint, the backer of the fund 120 00:08:43,360 --> 00:08:48,200 is very crucial to really getting a good grasp of what to think about when you're deploying 121 00:08:48,200 --> 00:08:53,280 capital, the types of risks, the potential for returns and how you're going to generate 122 00:08:53,280 --> 00:08:55,120 liquidity and so on. 123 00:08:55,120 --> 00:09:02,840 So in my experience, it was super, I guess, relevant and contributed largely to where 124 00:09:02,840 --> 00:09:05,160 I've landed today. 125 00:09:05,160 --> 00:09:14,520 Yeah, I think it was a natural progression for us to target family offices as LPs given 126 00:09:14,520 --> 00:09:17,960 we had worked previously in investing teams at family offices. 127 00:09:17,960 --> 00:09:22,840 I think family offices are like eclectic beasts. 128 00:09:22,840 --> 00:09:29,000 I think it probably doesn't look this way at the outside, but they're highly emotional 129 00:09:29,000 --> 00:09:30,880 organizations when you think about it. 130 00:09:30,880 --> 00:09:39,520 I was very surprised to understand and see firsthand, despite a solid investment strategy 131 00:09:39,520 --> 00:09:47,680 and process written down, how often decisions or investments would be made based on emotion 132 00:09:47,680 --> 00:09:49,720 and understanding that. 133 00:09:49,720 --> 00:09:50,720 And that's natural. 134 00:09:50,720 --> 00:09:51,720 That's life. 135 00:09:51,720 --> 00:09:54,560 It's not necessarily a good or a bad thing. 136 00:09:54,560 --> 00:10:00,960 But having that insight and seeing asset allocation exercises at a family office and then all 137 00:10:00,960 --> 00:10:07,640 the way through to the deployment and security selection operations, I think it gave us a 138 00:10:07,640 --> 00:10:16,120 good insight to talk the same language and to, when we're crafting our investment strategy, 139 00:10:16,120 --> 00:10:18,360 we're using that well for family offices. 140 00:10:18,360 --> 00:10:24,200 So it was a natural progression based on what we'd seen in our prior roles. 141 00:10:24,200 --> 00:10:26,360 So that progression led to Arbor Capital. 142 00:10:26,360 --> 00:10:29,320 So you have two funds, right? 143 00:10:29,320 --> 00:10:32,800 You got the original and then you've got the new fund. 144 00:10:32,800 --> 00:10:39,400 So why don't we, for Alice's segment that a bit, why don't we discuss the first fund, 145 00:10:39,400 --> 00:10:45,720 how the family office style learning, you figured out what you're looking for and then 146 00:10:45,720 --> 00:10:48,760 use that particular vehicle to invest, how the returns have been. 147 00:10:48,760 --> 00:10:53,480 Do you want to give an overview of that first fund and then we'll stick into the second? 148 00:10:53,480 --> 00:10:54,480 Sure. 149 00:10:54,480 --> 00:11:04,520 So the first fund was a typical closed end limited partnership focused on early stage 150 00:11:04,520 --> 00:11:05,640 technology investing. 151 00:11:05,640 --> 00:11:10,760 So seed and series A primarily had a very specific mandate. 152 00:11:10,760 --> 00:11:17,840 And it was fundamentally an extension of what Dan and I had been doing the previous few 153 00:11:17,840 --> 00:11:19,280 years at the family office. 154 00:11:19,280 --> 00:11:21,960 So it was a very defined mandate. 155 00:11:21,960 --> 00:11:29,720 We would look at B2B software as a service marketplace style business models across a 156 00:11:29,720 --> 00:11:33,520 sort of generalist approach from an industry perspective. 157 00:11:33,520 --> 00:11:41,360 And that fund is, what was that, 2015 vintage, I believe. 158 00:11:41,360 --> 00:11:44,440 So it's coming up on seven or eight years now. 159 00:11:44,440 --> 00:11:46,040 It's a 10 year fund. 160 00:11:46,040 --> 00:11:47,640 So it's hitting the tail end. 161 00:11:47,640 --> 00:11:51,600 We've just started to have exits come through in the last few years. 162 00:11:51,600 --> 00:11:58,040 I think our IRR, we've just had a couple of markdowns in this environment. 163 00:11:58,040 --> 00:12:04,360 So it's dropped from, I think, what was 44% to around 30, low 30s. 164 00:12:04,360 --> 00:12:08,760 MOIC is 5.7 from memory. 165 00:12:08,760 --> 00:12:12,120 It's a highly concentrated, high conviction fund. 166 00:12:12,120 --> 00:12:21,400 We typically took board seats and was as involved as we could be with the companies given time 167 00:12:21,400 --> 00:12:22,400 constraints. 168 00:12:22,400 --> 00:12:28,000 What were the returns? 169 00:12:28,000 --> 00:12:29,600 What's been the returns for that fund? 170 00:12:29,600 --> 00:12:37,040 Yes, MOIC was 5.7 IRRs sitting low 30s at the minute. 171 00:12:37,040 --> 00:12:42,040 And how's the alignment and the fees work? 172 00:12:42,040 --> 00:12:44,080 We took a pretty standard approach to fees. 173 00:12:44,080 --> 00:12:47,480 We just did two and 20. 174 00:12:47,480 --> 00:12:49,520 We didn't want to, well, we're pretty new, right? 175 00:12:49,520 --> 00:12:56,000 So Dan and I were both in our 20s when we started that fund, which I think in some respects 176 00:12:56,000 --> 00:13:01,080 was too young, but we were risk takers. 177 00:13:01,080 --> 00:13:05,680 We were lucky to have experienced private market investing at family offices. 178 00:13:05,680 --> 00:13:12,240 So there's a lot we didn't know, but in some sense, glad that we did that early because 179 00:13:12,240 --> 00:13:15,200 we've still got a good chunk of our careers left and we've learned so much. 180 00:13:15,200 --> 00:13:20,640 So it was a rolling that learning into this current fund as well. 181 00:13:20,640 --> 00:13:25,000 So the businesses which you look, so which we invested in with that original fund, what 182 00:13:25,000 --> 00:13:29,040 was the criteria like in order, what were you looking for? 183 00:13:29,040 --> 00:13:32,400 Do you want to take that Dan? 184 00:13:32,400 --> 00:13:34,120 Yeah, I'll take that one. 185 00:13:34,120 --> 00:13:41,360 So back then we had a very specific mandate for early stage, well, SaaS technology businesses. 186 00:13:41,360 --> 00:13:47,500 So quite a constrained mandate from the sense of not deploying broadly across categories, 187 00:13:47,500 --> 00:13:52,080 but looking heavily at companies that were at that expansion growth stage. 188 00:13:52,080 --> 00:13:56,400 So Series A and software oriented business models. 189 00:13:56,400 --> 00:14:01,400 So pretty much every company that's in the portfolio that we had there is a software 190 00:14:01,400 --> 00:14:08,000 based business model of some kind and has exposure across many different industries. 191 00:14:08,000 --> 00:14:11,320 So I think we have one that's sort of fintech exposed. 192 00:14:11,320 --> 00:14:17,480 We had one that was AI exposed, one that was logistics and one that was education. 193 00:14:17,480 --> 00:14:25,560 So as Ron said, very highly concentrated portfolio there with exposure to software business models. 194 00:14:25,560 --> 00:14:31,040 And then so these businesses, how did you find them? 195 00:14:31,040 --> 00:14:36,200 When initially I think given that Ron and I both came from the family office backing, 196 00:14:36,200 --> 00:14:40,800 we had fairly strong access to deal flow from many channels. 197 00:14:40,800 --> 00:14:43,960 So you kind of when you're working in the industry for a while, you sort of build up 198 00:14:43,960 --> 00:14:51,720 a natural direct inbound of founders that are looking to just have conversations with 199 00:14:51,720 --> 00:14:55,440 venture investors who have been around the industry for a while, who actually have seen 200 00:14:55,440 --> 00:14:56,780 many different opportunities. 201 00:14:56,780 --> 00:15:01,560 So we had a large amount of just cold inbound come to us personally. 202 00:15:01,560 --> 00:15:07,400 And I think second to that, the typical ways of getting out and meeting founders at events 203 00:15:07,400 --> 00:15:13,020 and promoting the brand through content pieces would always generate additional opportunities 204 00:15:13,020 --> 00:15:14,460 as well. 205 00:15:14,460 --> 00:15:20,980 Probably the most common strategy, I guess, for founders to reach out, at least in terms 206 00:15:20,980 --> 00:15:26,520 of some of the higher quality opportunities that we would have come across the decks were 207 00:15:26,520 --> 00:15:28,340 related to founder introductions. 208 00:15:28,340 --> 00:15:33,560 So these are founders that we'd already invested in or worked with in the past where they speak 209 00:15:33,560 --> 00:15:37,720 about us as their investor to other founders in the ecosystem. 210 00:15:37,720 --> 00:15:41,920 And those founders would then make the introduction and be like, okay, Dan, Ron, do you want 211 00:15:41,920 --> 00:15:43,680 to come chat to this particular company? 212 00:15:43,680 --> 00:15:48,560 That's always been a really strong source of deal flow. 213 00:15:48,560 --> 00:15:49,560 So interesting. 214 00:15:49,560 --> 00:15:57,360 And the other thing which we discussed many times before is when you were doing deals, 215 00:15:57,360 --> 00:16:02,400 some of these transactions, you would take actually quite a large percentage of the business. 216 00:16:02,400 --> 00:16:09,080 So and we discussed it with these quite like working with these founders led businesses. 217 00:16:09,080 --> 00:16:13,040 So you know, how much equity stake would you look to take in these businesses? 218 00:16:13,040 --> 00:16:17,920 And how would you go about helping improve those businesses? 219 00:16:17,920 --> 00:16:21,000 You know, to your benefit and their benefit. 220 00:16:21,000 --> 00:16:27,080 When we were doing our portfolio construction for the first fund, we had a target of around 221 00:16:27,080 --> 00:16:31,160 10% ownership. 222 00:16:31,160 --> 00:16:33,540 Now that that varied quite a lot. 223 00:16:33,540 --> 00:16:35,900 And it depends on entry, entry stage two. 224 00:16:35,900 --> 00:16:41,020 So we did a few pre seed investments where we own 20 or 25% of the business. 225 00:16:41,020 --> 00:16:43,980 And then in some series A investments, we were owning 5%. 226 00:16:43,980 --> 00:16:49,560 So your entry point can dictate that a lot. 227 00:16:49,560 --> 00:16:54,160 But I mean, we won't go too deep into it, because it's a big topic, but the venture 228 00:16:54,160 --> 00:17:00,760 returns and the power or dynamic and then you know, how big your portfolio is sort of 229 00:17:00,760 --> 00:17:06,120 dictates, if you're going to have a any given opportunity, have the potential to return 230 00:17:06,120 --> 00:17:12,000 the fund, you need to own, you know, a decent chunk of that. 231 00:17:12,000 --> 00:17:16,480 So the theory goes, so we didn't have any hard and fast limits. 232 00:17:16,480 --> 00:17:22,320 But I'd say around the end of the day, it was around a 10% ownership. 233 00:17:22,320 --> 00:17:26,200 The reason why I was asking that is, you know, we've seen the past couple of couple of years 234 00:17:26,200 --> 00:17:30,880 that this particular space take off, but if I'm understanding correctly, the majority 235 00:17:30,880 --> 00:17:36,560 of the investments you made were essentially before, you know, that bell curve went incredibly 236 00:17:36,560 --> 00:17:37,560 north. 237 00:17:37,560 --> 00:17:42,440 So it was that was that luck that you managed to set your feet at the right time? 238 00:17:42,440 --> 00:17:44,960 Or do we look into valuations? 239 00:17:44,960 --> 00:17:47,320 And the deals were attractive at that particular time. 240 00:17:47,320 --> 00:17:53,240 And then when I go, hi, we just don't want to touch this or you know, what was your mindset? 241 00:17:53,240 --> 00:17:54,240 Good question. 242 00:17:54,240 --> 00:17:56,160 It's a bit of both. 243 00:17:56,160 --> 00:18:03,080 I've always Dan and I've been talking a lot about how the venture fund is started really 244 00:18:03,080 --> 00:18:07,480 based on the timing of the principal's career, right? 245 00:18:07,480 --> 00:18:09,940 As opposed to where you are in a market cycle. 246 00:18:09,940 --> 00:18:15,840 And I think probably for better or for worse, and probably to be honest, for worse, the 247 00:18:15,840 --> 00:18:22,440 LPs in funds are exposed to venture funds separate to the market cycle. 248 00:18:22,440 --> 00:18:29,960 And not saying that you can predict that, but like we were, you know, mid to late 20s 249 00:18:29,960 --> 00:18:37,880 and venture was just sort of, you know, coming out of GFC pretty, pretty quiet in Australia. 250 00:18:37,880 --> 00:18:43,340 And we started at a fortuitous time when we just had then six, six years of just up and 251 00:18:43,340 --> 00:18:44,760 to the right in valuations. 252 00:18:44,760 --> 00:18:47,720 So that made us feel all very smart and special. 253 00:18:47,720 --> 00:18:51,400 But if we're honest, there's a good chunk of luck in that. 254 00:18:51,400 --> 00:19:00,480 On the analysis and decision making side, we are very price conscious around valuations. 255 00:19:00,480 --> 00:19:07,560 So that means in the last three years, we sat on our hands a good chunk of the time. 256 00:19:07,560 --> 00:19:16,080 We couldn't make sense of a lot of the valuations based on company growth rates and how big 257 00:19:16,080 --> 00:19:18,520 we thought any given opportunity could be. 258 00:19:18,520 --> 00:19:22,400 And comparing that to the valuation being proposed, we just couldn't see how we would 259 00:19:22,400 --> 00:19:26,400 hit our target IRR, which is 25%. 260 00:19:26,400 --> 00:19:32,120 And so we do a lot of rigorous modeling and analysis around that. 261 00:19:32,120 --> 00:19:35,440 And it meant that every time we were doing our valuation analysis, not every time, but 262 00:19:35,440 --> 00:19:41,080 like a good chunk of the time, we would either just bow out and say, guys, we can't, we don't 263 00:19:41,080 --> 00:19:46,000 believe we can make the returns given this price, or we would submit a term sheet based 264 00:19:46,000 --> 00:19:52,840 on the price that we were comfortable with, and we would get outbid by a large margin. 265 00:19:52,840 --> 00:20:00,200 And I mean, like in many instances up to 300%, there would be a fintech opportunity that 266 00:20:00,200 --> 00:20:05,320 we'd put at a 10 mil pre money at the seed stage and someone would come and pay 30. 267 00:20:05,320 --> 00:20:09,960 And that shakes you a bit because you start to go, well, are we missing something? 268 00:20:09,960 --> 00:20:14,840 Silly question, but I have to ask, like, did you ever look back at those cases when that 269 00:20:14,840 --> 00:20:18,240 occurred and go, is this company still alive? 270 00:20:18,240 --> 00:20:21,040 That's a very good question. 271 00:20:21,040 --> 00:20:23,240 Rowan and I speak about this all the time. 272 00:20:23,240 --> 00:20:28,800 Because to Rowan's point, sometimes we'd issue a term sheet and we'd be like, why have the 273 00:20:28,800 --> 00:20:30,320 founders gone quiet? 274 00:20:30,320 --> 00:20:31,520 Something's happening in the background here. 275 00:20:31,520 --> 00:20:34,320 We can't quite figure out what's going on. 276 00:20:34,320 --> 00:20:37,280 And then all of a sudden they'd come back and they'd be like, look, like we are actually 277 00:20:37,280 --> 00:20:42,600 accepting this term sheet that's three times higher valuation than what you guys have proposed. 278 00:20:42,600 --> 00:20:45,160 And we'd sit back and we'd just be like, this is ridiculous. 279 00:20:45,160 --> 00:20:48,400 I can't believe someone's willing to pay that amount. 280 00:20:48,400 --> 00:20:52,920 And it's interesting to your question, Murdoch, because on reflection, we actually do keep 281 00:20:52,920 --> 00:20:56,200 a strong relationship with all of the founders that we get to term sheet stage. 282 00:20:56,200 --> 00:21:02,400 And we often have looped back and tried to reconnect and explore opportunities to see 283 00:21:02,400 --> 00:21:07,560 if there's another opportunity to invest because presumably the companies have grown and become 284 00:21:07,560 --> 00:21:11,640 stronger, better companies and the market fundamentals have shifted in a way now where 285 00:21:11,640 --> 00:21:13,800 perhaps those valuations are more realistic. 286 00:21:13,800 --> 00:21:18,200 So actually early in the year, we started to do some of those reach outs to learn a 287 00:21:18,200 --> 00:21:21,360 bit about how wrong we were or if we were correct. 288 00:21:21,360 --> 00:21:22,920 And we had some interesting findings. 289 00:21:22,920 --> 00:21:28,240 Some of those businesses were raising at flat rounds despite being two or three times larger 290 00:21:28,240 --> 00:21:31,320 than what they were when we were looking at them initially. 291 00:21:31,320 --> 00:21:37,440 So heaps of valuation, multiple compression happened between, I guess, when we were outbid 292 00:21:37,440 --> 00:21:39,880 and when we'd revisited those opportunities. 293 00:21:39,880 --> 00:21:41,720 So it is fascinating. 294 00:21:41,720 --> 00:21:44,000 But I think Ron mentioned it earlier. 295 00:21:44,000 --> 00:21:51,360 I think the cycle of venture can be, I guess, a good thing working in the favor of everyone 296 00:21:51,360 --> 00:21:53,000 or it can be a bad thing. 297 00:21:53,000 --> 00:21:58,160 And I think at that particular point in time, three or four years ago, valuations were just 298 00:21:58,160 --> 00:21:59,160 out of control. 299 00:21:59,160 --> 00:22:06,340 So there was so much room for correction and multiple contraction, which I think has definitely 300 00:22:06,340 --> 00:22:07,800 started to unfold now. 301 00:22:07,800 --> 00:22:12,360 At least what we've seen in the market is that valuations are looking much more reasonable 302 00:22:12,360 --> 00:22:17,960 and a lot of these companies are actually still alive and succeeding. 303 00:22:17,960 --> 00:22:21,800 However, the valuations now look a lot better. 304 00:22:21,800 --> 00:22:24,320 Yeah, it's always good to talk. 305 00:22:24,320 --> 00:22:28,720 Don't use television shows when you're talking finance, but I always love that show, Silicon 306 00:22:28,720 --> 00:22:29,720 Valley, right? 307 00:22:29,720 --> 00:22:30,720 Hilarious. 308 00:22:30,720 --> 00:22:35,840 And there was a particular scene at a party when the guy's throwing a massive party and 309 00:22:35,840 --> 00:22:40,080 it's like, what's this for, we've raised half a billion dollars with this than the other. 310 00:22:40,080 --> 00:22:43,560 And then two years later, he sees a guy in a bar and he's just like, mate, what are you 311 00:22:43,560 --> 00:22:44,560 doing here? 312 00:22:44,560 --> 00:22:47,360 It's like 11 o'clock on a Monday. 313 00:22:47,360 --> 00:22:51,600 And the guy turns away and he goes, I'll give you one bit of advice. 314 00:22:51,600 --> 00:22:54,520 No one ever said, you know, you can take less money. 315 00:22:54,520 --> 00:22:55,520 Yeah. 316 00:22:55,520 --> 00:23:01,120 And everyone just looks at each other and just goes, wait, you can take less? 317 00:23:01,120 --> 00:23:03,920 He goes, yeah, no one ever said you could take less. 318 00:23:03,920 --> 00:23:07,960 Because what happens is the more you take, the more expectations grow, the more you have 319 00:23:07,960 --> 00:23:09,880 to grow, the faster you have to grow. 320 00:23:09,880 --> 00:23:14,040 And it's fine if you hit the first hurdle, everyone's happy, but you know, then it's 321 00:23:14,040 --> 00:23:15,560 a bigger hurdle. 322 00:23:15,560 --> 00:23:17,880 So then he's practically hammered. 323 00:23:17,880 --> 00:23:21,720 He's like, best advice I can give you since you're doing a deal, you can take less, take 324 00:23:21,720 --> 00:23:22,720 less. 325 00:23:22,720 --> 00:23:25,920 I thought that was the best bit of television advice I've ever heard. 326 00:23:25,920 --> 00:23:29,480 But no one ever discusses that because everyone gets paid from doing all the deals and it 327 00:23:29,480 --> 00:23:30,480 all gets exciting. 328 00:23:30,480 --> 00:23:31,480 Yeah. 329 00:23:31,480 --> 00:23:32,480 It's funny. 330 00:23:32,480 --> 00:23:34,840 But no, good, good digression. 331 00:23:34,840 --> 00:23:38,560 Big, best series of best tech oriented series of all time. 332 00:23:38,560 --> 00:23:41,920 I think that's so legendary. 333 00:23:41,920 --> 00:23:46,240 But it's a good point that you make because it's actually, I mean, some of the shifts 334 00:23:46,240 --> 00:23:51,320 that we've seen in the market over the last 12 months, really positive in that sense, 335 00:23:51,320 --> 00:23:55,480 starting to see founders think a lot more about, you know, how do we do more with the 336 00:23:55,480 --> 00:23:58,280 money that we have or that we're going to raise? 337 00:23:58,280 --> 00:24:02,040 They're a lot more conservative with their projections, with their thinking around capital 338 00:24:02,040 --> 00:24:04,200 injection coming into the company. 339 00:24:04,200 --> 00:24:10,600 So that's had, I think there's very positive flow on effects from a lot of the macro environment, 340 00:24:10,600 --> 00:24:16,120 I guess, complexities that we've had over the last 12 to 24 months. 341 00:24:16,120 --> 00:24:21,080 And it's really forcing founders and investors to go back to the table and rethink some of 342 00:24:21,080 --> 00:24:24,720 these growth models and some of these business models. 343 00:24:24,720 --> 00:24:27,520 And, you know, how do you actually sustain a business long term? 344 00:24:27,520 --> 00:24:30,680 How do you make a business that doesn't need to raise capital? 345 00:24:30,680 --> 00:24:34,480 It's good to see that conversation coming back into the picture. 346 00:24:34,480 --> 00:24:38,080 And definitely something that Rowan and I have thought about a lot with the new fund 347 00:24:38,080 --> 00:24:43,640 is looking at those opportunities to sort of ride the wave of that corrected logic in 348 00:24:43,640 --> 00:24:45,040 the market, which is good. 349 00:24:45,040 --> 00:24:49,240 Well, this is a great segue after everything into the second front, right? 350 00:24:49,240 --> 00:24:53,120 We've learned, we've made money, we've prospered, things have gone wrong. 351 00:24:53,120 --> 00:24:56,040 So I would love to hear what is the new fund? 352 00:24:56,040 --> 00:24:57,720 Why has it been started now? 353 00:24:57,720 --> 00:24:59,280 I think we're discussing as well. 354 00:24:59,280 --> 00:25:03,160 There's what three different tiers of investments. 355 00:25:03,160 --> 00:25:05,240 You look at all the thinking of the investments. 356 00:25:05,240 --> 00:25:09,040 So if you want to give everyone maybe let's begin with how is it structured? 357 00:25:09,040 --> 00:25:10,560 Why is it structured that way? 358 00:25:10,560 --> 00:25:11,600 What are you looking for? 359 00:25:11,600 --> 00:25:13,880 And then how you tier the investments? 360 00:25:13,880 --> 00:25:16,520 Maybe I'll do the high level and then pass to Rowan. 361 00:25:16,520 --> 00:25:20,200 I think this one will have to split because there's a lot to unpack here. 362 00:25:20,200 --> 00:25:25,440 So at a very high level, Arbor Capital, our new fund, is an investment firm that's focused 363 00:25:25,440 --> 00:25:29,840 on venture capital and growth equity investing in technology companies globally. 364 00:25:29,840 --> 00:25:35,000 I guess the tagline for the fund or the tagline that Rowan and I pitch when we talk about 365 00:25:35,000 --> 00:25:39,080 the fund to founders is that we provide patient capital for high growth private technology 366 00:25:39,080 --> 00:25:40,080 companies. 367 00:25:40,080 --> 00:25:45,680 And there's a lot to unpack about how we got to that point and I guess how we came to the 368 00:25:45,680 --> 00:25:46,880 foundations of the fund. 369 00:25:46,880 --> 00:25:52,280 But initially a lot of our thinking stemmed from the fact that Rowan and I were both very 370 00:25:52,280 --> 00:25:58,240 passionate long-term thinkers and we wanted to align that personal mode of operations 371 00:25:58,240 --> 00:26:03,240 with I guess our strong conviction that patient capital being deployed into private technology 372 00:26:03,240 --> 00:26:06,880 opportunities could deliver superior returns long-term. 373 00:26:06,880 --> 00:26:12,200 And so those concepts of patience, long-term thinking, long-term investing, compounding 374 00:26:12,200 --> 00:26:17,980 capital and private high growth technology companies were sort of key to the foundations 375 00:26:17,980 --> 00:26:22,880 and establishment of Arbor Capital, which is the current fund that we're working on 376 00:26:22,880 --> 00:26:25,200 and raising. 377 00:26:25,200 --> 00:26:32,600 And I think there were so many learnings that we had from our first fund that led to some 378 00:26:32,600 --> 00:26:40,600 of the more technical elements of the development that perhaps Rowan can touch on just around 379 00:26:40,600 --> 00:26:45,240 how we structured it, why we structured it that way and how we landed on the strategy 380 00:26:45,240 --> 00:26:46,240 that we have today. 381 00:26:46,240 --> 00:26:53,760 Yeah, so those principles of long-term thinking and patience manifested into two material 382 00:26:53,760 --> 00:26:59,920 changes to I guess the investment strategy and the structure comparing the last fund 383 00:26:59,920 --> 00:27:02,000 to this one. 384 00:27:02,000 --> 00:27:07,360 On the investment strategy side, it meant that we broadened our scope a little bit to 385 00:27:07,360 --> 00:27:12,240 not just pure play venture opportunities, but private companies that were still high 386 00:27:12,240 --> 00:27:21,440 growth, but they weren't on that venture trajectory of orders of magnitude, like multiple returns 387 00:27:21,440 --> 00:27:28,400 and that a company that could be 20% or 30% KGAR growth that might be bootstrapped is 388 00:27:28,400 --> 00:27:33,040 still an attractive opportunity, but falls outside the mandate of a lot of those traditional 389 00:27:33,040 --> 00:27:34,040 funds. 390 00:27:34,040 --> 00:27:39,200 And we were seeing a lot of these opportunities and were restricted in our prior mandate from 391 00:27:39,200 --> 00:27:40,240 taking a look at them. 392 00:27:40,240 --> 00:27:45,480 So they'd come across the table, Dan and I'd be like, fuck, this is an interesting business. 393 00:27:45,480 --> 00:27:49,720 Wish we could dig deeper and take a look, but it's just not in the mandate. 394 00:27:49,720 --> 00:27:51,320 So we'd take a pass. 395 00:27:51,320 --> 00:27:55,000 And we'd always spoken like one day we'd love to be able to include these types of 396 00:27:55,000 --> 00:28:01,280 bootstrapped and non-venture scale businesses in our strategy. 397 00:28:01,280 --> 00:28:03,160 So this fund was an opportunity to do that. 398 00:28:03,160 --> 00:28:07,480 So we now look at businesses that have been bootstrapped. 399 00:28:07,480 --> 00:28:12,800 We now look at secondary transactions, whether that's allowing founders to de-risk their 400 00:28:12,800 --> 00:28:20,440 personal lives and take some money off the table or buying off other existing investors 401 00:28:20,440 --> 00:28:22,360 and sort of everything between that spectrum. 402 00:28:22,360 --> 00:28:24,000 So we've broadened that scope. 403 00:28:24,000 --> 00:28:29,640 It's still high growth private technology companies, but not just C series A venture 404 00:28:29,640 --> 00:28:32,400 scale opportunities. 405 00:28:32,400 --> 00:28:35,400 So that's the investment strategy and how it's different. 406 00:28:35,400 --> 00:28:39,880 The other quite meaningful change was to the fund structure itself. 407 00:28:39,880 --> 00:28:48,800 We did a lot of reflection and deep thinking around why funds tend to be these 10 year 408 00:28:48,800 --> 00:28:51,320 life closed end vehicles. 409 00:28:51,320 --> 00:28:53,120 What's driving that fund life? 410 00:28:53,120 --> 00:28:58,160 Summer seven, summer 10 plus two, these closed end structures. 411 00:28:58,160 --> 00:29:02,880 And Dan and I had had a series of conversations with probably older, more experienced investors 412 00:29:02,880 --> 00:29:07,360 around liquidity and time horizons and things like that. 413 00:29:07,360 --> 00:29:14,120 Some principle that we'd taken away was that having an arbitrary end life to your fund 414 00:29:14,120 --> 00:29:20,160 may not marry up with the natural exit point of any given company in your portfolio. 415 00:29:20,160 --> 00:29:26,800 And I think there's some funds in market today that have 2012 vintage that are probably coming 416 00:29:26,800 --> 00:29:30,360 to wind up stage now. 417 00:29:30,360 --> 00:29:37,880 And I know some of their portfolio companies aren't ready to either list or trade sale 418 00:29:37,880 --> 00:29:42,960 and having to have conversations with their LPs about extending the fund or doing secondary 419 00:29:42,960 --> 00:29:43,960 transactions. 420 00:29:43,960 --> 00:29:50,520 And we just thought we would prefer to hold a position in our fund until it's the right 421 00:29:50,520 --> 00:29:51,520 time to sell. 422 00:29:51,520 --> 00:29:52,520 That could be three years. 423 00:29:52,520 --> 00:29:55,200 It could be to be extreme 30. 424 00:29:55,200 --> 00:30:01,480 If you hold a successful company that's compounding capital at high rates, we would like to hold 425 00:30:01,480 --> 00:30:04,000 that company until it's the right time to sell. 426 00:30:04,000 --> 00:30:09,720 So we ended up shifting away from closed end fund structure to effectively an evergreen 427 00:30:09,720 --> 00:30:15,720 or permanent capital structure where we can open the books periodically to take more capital 428 00:30:15,720 --> 00:30:16,720 in. 429 00:30:16,720 --> 00:30:22,120 That's also probably a topic for another day, but it provides us the ability to give liquidity 430 00:30:22,120 --> 00:30:24,320 to our investors periodically. 431 00:30:24,320 --> 00:30:29,880 But probably most importantly, it allows us to make the decision of when to liquidate 432 00:30:29,880 --> 00:30:35,320 a position at the right time for us and the company, not when the fund ends in two years 433 00:30:35,320 --> 00:30:37,360 time, for example. 434 00:30:37,360 --> 00:30:43,720 Yeah, that's quite frustrating and challenging because as you said, the first fund, what, 435 00:30:43,720 --> 00:30:47,000 it's seven years in, you literally have three years and then what's going to happen to the 436 00:30:47,000 --> 00:30:48,000 businesses? 437 00:30:48,000 --> 00:30:51,960 Or can you potentially structure in a way if those businesses are going quite well, 438 00:30:51,960 --> 00:30:55,760 your second fund can essentially acquire the interest in the other fund or does everything 439 00:30:55,760 --> 00:30:58,200 kind of have to be dispersed? 440 00:30:58,200 --> 00:31:02,700 Yeah, there's a few things that happen at the end of a fund life. 441 00:31:02,700 --> 00:31:07,880 One is that you baked in your LPA, your limited partner agreement, you have an option to extend. 442 00:31:07,880 --> 00:31:12,640 So 10 plus two plus two is reasonably common. 443 00:31:12,640 --> 00:31:15,520 You can sell your position on the secondary market. 444 00:31:15,520 --> 00:31:17,240 You can roll it into another fund. 445 00:31:17,240 --> 00:31:24,480 And yeah, there's a plethora of options, but I think what didn't make sense to us was just 446 00:31:24,480 --> 00:31:28,760 having this arbitrary end date, like maybe 10 years is a good amount, maybe it's not, 447 00:31:28,760 --> 00:31:31,360 but wouldn't you rather hold the company until the right time? 448 00:31:31,360 --> 00:31:33,400 It just sounds clunky and unnecessary. 449 00:31:33,400 --> 00:31:36,680 It sounds like the people that are making money out of that are the lawyers and the 450 00:31:36,680 --> 00:31:37,680 accountants. 451 00:31:37,680 --> 00:31:40,000 Yeah, true. 452 00:31:40,000 --> 00:31:45,400 We very much just thought about it as like, the best time to exit a particular holding 453 00:31:45,400 --> 00:31:51,520 or a particular company will vary so much company to company and it has no bearing or 454 00:31:51,520 --> 00:31:59,400 no relationship to how old our fund is and also how much we need liquidity in some sense. 455 00:31:59,400 --> 00:32:05,320 The best time to exit a company will be when the best time to exit that particular company 456 00:32:05,320 --> 00:32:09,140 is, and no other factor should determine that. 457 00:32:09,140 --> 00:32:12,600 So when we were thinking about fund design, to Roland's point, it was critical for us 458 00:32:12,600 --> 00:32:22,320 that the structure allowed for us to hold positions as long as we need to generate optimal 459 00:32:22,320 --> 00:32:23,320 returns. 460 00:32:23,320 --> 00:32:28,640 And, you know, I say to generate optimal returns because we might also realize that an asset 461 00:32:28,640 --> 00:32:33,200 is no longer going to grow at the rate that we need it to and then that is the time to 462 00:32:33,200 --> 00:32:35,760 exit that specific position. 463 00:32:35,760 --> 00:32:42,560 So it's not necessarily that all assets would be held forever, but more that we do thoroughly 464 00:32:42,560 --> 00:32:46,120 our analysis to work out when the right time was to exit a particular holding. 465 00:32:46,120 --> 00:32:49,400 Well, it makes our lives a lot easier, especially when we're speaking with clients. 466 00:32:49,400 --> 00:32:52,800 One of the main topics we found in the offices and wealthy families these days is how do 467 00:32:52,800 --> 00:32:57,360 you transition wealth, the transfer, the intergenerational transfer. 468 00:32:57,360 --> 00:33:01,880 And then what you learn and you understand is that these founders, wouldn't you agree, 469 00:33:01,880 --> 00:33:05,160 these founders, they're the ones that have the vision, build something up, but it's a 470 00:33:05,160 --> 00:33:10,560 lot to take for the second, you know, generational or third generation to be forced into being, 471 00:33:10,560 --> 00:33:14,480 you know, I don't know, a baker, candle smith maker when essentially under there a musician, 472 00:33:14,480 --> 00:33:15,480 right? 473 00:33:15,480 --> 00:33:16,480 You know, what do they know? 474 00:33:16,480 --> 00:33:21,760 But, you know, in saying that as well, they shouldn't be robbed of potentially a great 475 00:33:21,760 --> 00:33:28,320 business that's generating a 30% cashflow every single year because it's a great product. 476 00:33:28,320 --> 00:33:31,680 Yes, they don't want to have a bar of it, but you know, that cashflow is quite important 477 00:33:31,680 --> 00:33:33,040 and it's doing the right thing. 478 00:33:33,040 --> 00:33:35,320 So here's a question. 479 00:33:35,320 --> 00:33:42,080 Do you think potentially the closed ended funds is a main reason why there's such a, 480 00:33:42,080 --> 00:33:50,040 you know, push for transactions in these businesses or do you think if the main structure was 481 00:33:50,040 --> 00:33:53,560 like similar to the structure, which is setting up for the second fund, there wouldn't be 482 00:33:53,560 --> 00:33:59,680 this need to look for exits as much? 483 00:33:59,680 --> 00:34:02,600 I'm just thinking behavioral psychology. 484 00:34:02,600 --> 00:34:05,640 And the reason why I'm going with this is kind of like when the American system kicked 485 00:34:05,640 --> 00:34:10,360 things off, as in they'll go in and you'll get a three year contract, got the contract 486 00:34:10,360 --> 00:34:16,480 hit, so got the company hit all their incentive schemes get paid, but they just cannibalize 487 00:34:16,480 --> 00:34:20,600 the entire next three, five years of the in order to achieve everything today. 488 00:34:20,600 --> 00:34:24,400 And then, you know, it looks great on the stocks right now, but then the next 10 years, 489 00:34:24,400 --> 00:34:25,720 the life of the company is horrendous. 490 00:34:25,720 --> 00:34:30,280 Do you think there's a changing culture now? 491 00:34:30,280 --> 00:34:31,560 I don't know. 492 00:34:31,560 --> 00:34:32,560 That's a good question. 493 00:34:32,560 --> 00:34:37,680 Like I know there's a few funds that have breakout companies like Canva in there at 494 00:34:37,680 --> 00:34:38,680 the moment. 495 00:34:38,680 --> 00:34:44,000 And I think from what I understand, those LPs have been happy to extend the fund lives 496 00:34:44,000 --> 00:34:49,040 because you know, there will be, there's been a lot of paper value creation on Canva and 497 00:34:49,040 --> 00:34:51,800 that will materialize into liquidity at some point. 498 00:34:51,800 --> 00:34:55,760 So I think if you're sitting there as an LP in one of those funds that holds Canva, you're 499 00:34:55,760 --> 00:34:58,360 probably happy to wait. 500 00:34:58,360 --> 00:35:04,760 On the flip side, if you've got a company that's not performing so well, there's value 501 00:35:04,760 --> 00:35:09,400 there, but the line of sight to liquidity is less clear. 502 00:35:09,400 --> 00:35:12,760 You might be sitting there going, well, we can, what are we holding on for? 503 00:35:12,760 --> 00:35:17,840 Like, are we actually, is our capital tied up here to produce more returns or is it tied 504 00:35:17,840 --> 00:35:20,920 up here on a, on a hope that things will get better? 505 00:35:20,920 --> 00:35:23,280 So yeah, it's a good question. 506 00:35:23,280 --> 00:35:24,280 I'm not sure. 507 00:35:24,280 --> 00:35:32,400 So from memory, the average life cycle of day zero to IPO of a company is 10 years in 508 00:35:32,400 --> 00:35:33,480 Australia, I think. 509 00:35:33,480 --> 00:35:38,360 So maybe it's something to do with, you know, on average liquidity should happen in 10 years 510 00:35:38,360 --> 00:35:39,360 in a company. 511 00:35:39,360 --> 00:35:43,200 And maybe that's where the sort of 10 year fund life came from, but I'm not sure. 512 00:35:43,200 --> 00:35:48,880 Well, we'll dig into that, you know, another day, but let's get to the fun stuff. 513 00:35:48,880 --> 00:35:51,840 What are, what opportunities are you seeing in the market? 514 00:35:51,840 --> 00:35:56,080 And why I'm really interested in this, God has been a roller coaster, you know, free 515 00:35:56,080 --> 00:36:00,160 money being poured, poured in on the macro, you know, during COVID times, then they go, 516 00:36:00,160 --> 00:36:01,320 oh, it's too much. 517 00:36:01,320 --> 00:36:07,800 You know, let's pour water over this fire, starve everyone, everyone's pivoting. 518 00:36:07,800 --> 00:36:12,280 And then we're in this interesting time where, I don't know, the conversations we're having 519 00:36:12,280 --> 00:36:16,000 is there's a lot of companies out there that want money, need money. 520 00:36:16,000 --> 00:36:20,320 And it's a great, potentially hypothetically, a great time to invest. 521 00:36:20,320 --> 00:36:23,960 But a lot of families, they're a bit gun shy. 522 00:36:23,960 --> 00:36:26,600 It's probably the nicest way to do it. 523 00:36:26,600 --> 00:36:30,200 And not necessarily gun shy, they're looking at other alternative assets such as, you know, 524 00:36:30,200 --> 00:36:33,840 commercial property, you know, private lending's paying 15%. 525 00:36:33,840 --> 00:36:35,840 It's more, you know, risk reward. 526 00:36:35,840 --> 00:36:36,840 Right. 527 00:36:36,840 --> 00:36:42,920 So, you know, how are you finding the sentiment out there for the asset class, which you guys 528 00:36:42,920 --> 00:36:44,760 currently cover? 529 00:36:44,760 --> 00:36:46,760 And what opportunities are you currently seeing? 530 00:36:46,760 --> 00:36:50,600 I think there's probably two questions in there. 531 00:36:50,600 --> 00:36:56,440 So, the first one is like sentiment, I guess, from the families and the LPs behind each 532 00:36:56,440 --> 00:36:58,400 of the funds that are being raised at the moment. 533 00:36:58,400 --> 00:37:02,520 And then the second one is like one of the actual opportunities that we're seeing in 534 00:37:02,520 --> 00:37:05,440 the market to deploy capital. 535 00:37:05,440 --> 00:37:10,380 And I think maybe I'll touch on the second one and Rowan, you could touch a little bit 536 00:37:10,380 --> 00:37:12,160 on the first part of that. 537 00:37:12,160 --> 00:37:13,160 So on the LPs. 538 00:37:13,160 --> 00:37:19,080 In terms of the technology opportunities, I think we're seeing a range of different 539 00:37:19,080 --> 00:37:20,160 things come through now. 540 00:37:20,160 --> 00:37:25,220 We're starting to see companies that are falling out of the scope of VC because they've been 541 00:37:25,220 --> 00:37:27,400 backed by VC dollars in the past. 542 00:37:27,400 --> 00:37:32,640 However, they're not high enough growth rates anymore to sustain VC reinvestment. 543 00:37:32,640 --> 00:37:36,040 So there's a lot of those type companies coming through that are like, well, actually, you 544 00:37:36,040 --> 00:37:39,760 know, if we're not going to be on that 100X journey anymore, what do we do? 545 00:37:39,760 --> 00:37:40,760 How do we raise money? 546 00:37:40,760 --> 00:37:42,880 How do we actually flip this business, make it sustainable? 547 00:37:42,880 --> 00:37:48,400 Make it more interesting to a wider range of investors or actually turn it to profitability? 548 00:37:48,400 --> 00:37:54,440 Starting to see a lot of founders have those sorts of discussions with their investor base 549 00:37:54,440 --> 00:38:00,080 and also within their boards, which is interesting in generating a whole new type of deal flow 550 00:38:00,080 --> 00:38:02,080 and opportunity. 551 00:38:02,080 --> 00:38:05,920 I think we're seeing a lot more founders in the early stage actually start to think about, 552 00:38:05,920 --> 00:38:09,320 you know, how do I build a business that doesn't require funding? 553 00:38:09,320 --> 00:38:16,440 Or is there a way to reduce or limit the amount of funding that I need over the overall journey 554 00:38:16,440 --> 00:38:21,600 so that I don't find myself having to raise, you know, enormous amounts of capital and 555 00:38:21,600 --> 00:38:28,280 have huge preferential stacks above all the ordinary shareholders, which is also a theme 556 00:38:28,280 --> 00:38:31,480 that's been talked about a lot at the moment. 557 00:38:31,480 --> 00:38:36,480 Just for those that aren't across it there, that's how the preference stack of capital 558 00:38:36,480 --> 00:38:41,040 impacts the ordinary shareholders and most often the ordinary shareholders will be the 559 00:38:41,040 --> 00:38:43,920 employees and founders of the businesses themselves. 560 00:38:43,920 --> 00:38:51,240 There's a lot of, I guess, talk around some of those concepts. 561 00:38:51,240 --> 00:38:57,680 And then more broadly, I think we're seeing a lot of just well-priced great founders building 562 00:38:57,680 --> 00:39:01,160 good businesses that are just coming through looking for great strategic partners long 563 00:39:01,160 --> 00:39:02,160 term. 564 00:39:02,160 --> 00:39:08,480 So I think that's been an exciting trend as well in terms of the LPs, maybe Rowan, you 565 00:39:08,480 --> 00:39:12,800 can cover, I guess, the appetite side of things like with the capital flowing into venture 566 00:39:12,800 --> 00:39:13,800 funds. 567 00:39:13,800 --> 00:39:14,800 Yeah. 568 00:39:14,800 --> 00:39:22,480 So I'd say in the last year, so we've had a lot of conversations with both existing 569 00:39:22,480 --> 00:39:28,720 and prospective LPs, predominantly family offices over the last 12 months. 570 00:39:28,720 --> 00:39:36,640 And there's been probably since that Silicon Valley Bank, the regional banking crisis in 571 00:39:36,640 --> 00:39:44,440 the US since that early March, there's been a lot of pullback in interest in private markets, 572 00:39:44,440 --> 00:39:46,200 we've found. 573 00:39:46,200 --> 00:39:52,960 And talking to our peers in the venture space, that seems to be unanimous. 574 00:39:52,960 --> 00:39:57,920 And that sort of coincides with the inflation and the rate rises. 575 00:39:57,920 --> 00:40:02,640 So as the interest rates go up, pushes up the discount rate, lowers valuation. 576 00:40:02,640 --> 00:40:08,360 So I think there was a dynamic of people not wanting to catch a falling knife and do new 577 00:40:08,360 --> 00:40:14,680 deals knowing that they could be buying something that's value is lower in any subsequent month 578 00:40:14,680 --> 00:40:16,240 after that for a period of time. 579 00:40:16,240 --> 00:40:22,800 So most investors we spoke to were sitting on their hands, they were having to allocate 580 00:40:22,800 --> 00:40:30,080 any liquid capital they have into re-upping either the main family business where the 581 00:40:30,080 --> 00:40:34,800 initial wealth came from, if that's still an operating business or re-upping into existing 582 00:40:34,800 --> 00:40:37,760 funds that were having to then re-up into their portfolio. 583 00:40:37,760 --> 00:40:47,480 So there was a lot of holding cash for those types of scenarios, which is funny because 584 00:40:47,480 --> 00:40:50,900 we spoke earlier in the conversation about how uncomfortable we were with valuations 585 00:40:50,900 --> 00:40:56,240 for the prior three years around that exact same time, like the start of 2022 calendar 586 00:40:56,240 --> 00:40:57,280 year. 587 00:40:57,280 --> 00:41:01,360 We got really excited about valuations for the first time in a long time and we were 588 00:41:01,360 --> 00:41:03,080 eager to deploy. 589 00:41:03,080 --> 00:41:08,960 And it's one of those sort of fearful when others are greedy situations where we were 590 00:41:08,960 --> 00:41:15,720 seeing the best deals of many years and no one was there doing them. 591 00:41:15,720 --> 00:41:22,280 So I found that very interesting, but I think of recent, like the last couple of months, 592 00:41:22,280 --> 00:41:26,600 I think people are starting to be a bit more confident again, we're seeing deals get done. 593 00:41:26,600 --> 00:41:31,400 Valuations are still modest and attractive in our opinion. 594 00:41:31,400 --> 00:41:37,320 But yeah, it's still the pace is so much slower than the prior three years. 595 00:41:37,320 --> 00:41:43,080 Yeah, look, I was speaking with someone else that pointed out to me that that Christmas 596 00:41:43,080 --> 00:41:49,200 rally which we saw like October, November, the Russell 2000 literally in a month or five 597 00:41:49,200 --> 00:41:54,200 weeks had went from its 52 week low to its 52 week high. 598 00:41:54,200 --> 00:41:55,200 Wow. 599 00:41:55,200 --> 00:41:56,200 Yeah, crazy. 600 00:41:56,200 --> 00:41:59,600 Right after doing nothing like before. 601 00:41:59,600 --> 00:42:03,560 And then the other thing which was quite interesting, which we saw like, you know, just doing a 602 00:42:03,560 --> 00:42:07,880 check over what happened last year is if we completely disregarded what interest rates 603 00:42:07,880 --> 00:42:13,040 did and we literally made our investment decisions on macroeconomics here, based on the Australian 604 00:42:13,040 --> 00:42:18,200 10 year bond rate and the US 10 year bond rate, you pretty much would have called the 605 00:42:18,200 --> 00:42:19,200 market. 606 00:42:19,200 --> 00:42:23,800 I find incredibly interesting about things how things have behaved. 607 00:42:23,800 --> 00:42:30,520 So that's why it's very interesting to hear what you guys are seeing as opportunity currently. 608 00:42:30,520 --> 00:42:35,400 And then what do you think is going to happen 2024? 609 00:42:35,400 --> 00:42:37,320 Pretty excited about 2024 to be honest. 610 00:42:37,320 --> 00:42:43,200 I think a lot of people are thinking about the market as sort of like a fresh slate, 611 00:42:43,200 --> 00:42:48,600 see what happens, see what happens with the interest rate rises if they come through, 612 00:42:48,600 --> 00:42:50,040 how that impact will flow on. 613 00:42:50,040 --> 00:42:57,280 But if we're talking specifically around startups and technology companies and, you know, building 614 00:42:57,280 --> 00:43:02,320 business, I think, as I mentioned earlier, there's been like this return to fundamental 615 00:43:02,320 --> 00:43:08,800 thinking and that's a really good theme for us as investors and I guess anyone as an investor 616 00:43:08,800 --> 00:43:13,940 right now looking at private market opportunities because it's just forcing the discipline back 617 00:43:13,940 --> 00:43:19,280 into the industry that perhaps was lost a lot over the last of the prior 10 years or 618 00:43:19,280 --> 00:43:23,760 prior five years, I should say, when there was just an abundance of capital available 619 00:43:23,760 --> 00:43:27,160 in the market just flowing into these technology companies. 620 00:43:27,160 --> 00:43:33,400 That created a lot of unstructured thinking, a lot of lack of discipline and, you know, 621 00:43:33,400 --> 00:43:36,080 the flow and effects of those things are huge. 622 00:43:36,080 --> 00:43:42,600 And seeing that correct, I think has been a very good experience and I'm quite optimistic 623 00:43:42,600 --> 00:43:46,880 about the opportunities that we're seeing come across the desk already across all the 624 00:43:46,880 --> 00:43:48,680 categories, AI being a big one. 625 00:43:48,680 --> 00:43:51,600 We're seeing a lot of that at the moment. 626 00:43:51,600 --> 00:43:57,240 So I think, yeah, you know, there's no shortage of entrepreneurial talent and technology companies 627 00:43:57,240 --> 00:43:58,560 coming through. 628 00:43:58,560 --> 00:44:06,460 It's more so trying to find some stability and clarity through a lot of the macro uncertainty 629 00:44:06,460 --> 00:44:07,960 and how that unfolds. 630 00:44:07,960 --> 00:44:14,120 Yeah, Dan, so you mentioned AI, it wouldn't be a conversation in this century if we didn't 631 00:44:14,120 --> 00:44:15,240 discuss AI. 632 00:44:15,240 --> 00:44:21,080 So with the deals that you're currently seeing, what's interesting that you're seeing that's 633 00:44:21,080 --> 00:44:26,560 come across the table, are they companies that are legacy that AI has been introduced 634 00:44:26,560 --> 00:44:34,040 to to kind of make them become attractive or are these legitimate problems being solved 635 00:44:34,040 --> 00:44:41,040 by artificial intelligence as a tool to essentially improve the service industry or solve a problem? 636 00:44:41,040 --> 00:44:44,760 You know, it's a good question, Madoc. 637 00:44:44,760 --> 00:44:49,320 We are seeing a lot of, I think, Ron and I sit back and talk about this all the time 638 00:44:49,320 --> 00:44:52,640 because there's a lot of noise in the AI space at the moment. 639 00:44:52,640 --> 00:44:56,120 I think it's something that investors have to be very careful about. 640 00:44:56,120 --> 00:45:02,720 And I mean, we have had many discussions where we think a lot of the AI opportunities that 641 00:45:02,720 --> 00:45:07,960 are out there in the market at the moment are actually uninvestable or not interesting. 642 00:45:07,960 --> 00:45:09,320 And there's a couple of reasons for this. 643 00:45:09,320 --> 00:45:13,800 You touched on a few of them, but I think there's a lot of businesses out there that 644 00:45:13,800 --> 00:45:22,240 are sort of positioning themselves as AI enabled or AI equipped that are actually just to your 645 00:45:22,240 --> 00:45:25,440 earlier thoughts in the podcast that we've been speaking about, like, you know, they 646 00:45:25,440 --> 00:45:31,720 might be services businesses or they might be software businesses that are non-AI that 647 00:45:31,720 --> 00:45:34,220 are bolting on AI functionality. 648 00:45:34,220 --> 00:45:39,800 They may be early stage companies that are positioning themselves as AI, but there's 649 00:45:39,800 --> 00:45:42,680 actually no AI talent in the team. 650 00:45:42,680 --> 00:45:44,520 They don't actually have in-house AI. 651 00:45:44,520 --> 00:45:46,360 They're just leveraging third-party apps. 652 00:45:46,360 --> 00:45:52,160 So you have to be very disciplined, I guess, and specific and do your diligence on most 653 00:45:52,160 --> 00:45:57,000 of the AI that's coming through at the moment to actually validate that one, it is what 654 00:45:57,000 --> 00:46:00,880 it claims to be in terms of there is AI there. 655 00:46:00,880 --> 00:46:05,400 Two, that there's actually people in these companies that understand what the AI is doing 656 00:46:05,400 --> 00:46:10,960 and how it's working and how to create value from that AI. 657 00:46:10,960 --> 00:46:17,720 And three, that there's actually a sufficient or should I say viable business model behind 658 00:46:17,720 --> 00:46:22,640 the AI component of the business that should be monetized or could be monetized. 659 00:46:22,640 --> 00:46:26,400 So these are some of the discussions that Roland and I have when something comes across 660 00:46:26,400 --> 00:46:31,480 the desk, the first thing we'll look at is what's actually here in this business that's 661 00:46:31,480 --> 00:46:33,880 AI and who is building it. 662 00:46:33,880 --> 00:46:38,240 And if you start to do that level of analysis, I think you learn pretty quickly that there 663 00:46:38,240 --> 00:46:39,240 is a lot of noise. 664 00:46:39,240 --> 00:46:43,840 There's a lot of garbage and you do have to be very careful with what you're investing 665 00:46:43,840 --> 00:46:44,840 in. 666 00:46:44,840 --> 00:46:50,840 And to be frank, there's very few businesses out there that have actually proven a viable 667 00:46:50,840 --> 00:46:55,880 business model where the economics are sustainable and make sense, at least from what I've seen. 668 00:46:55,880 --> 00:47:04,520 So I think there's a lot of AI opportunity, a lot of technical interest and entrepreneurial 669 00:47:04,520 --> 00:47:07,200 interest going into the category, but definitely something to be very careful of. 670 00:47:07,200 --> 00:47:11,840 I'm not sure if you had anything to add to that, Roland. 671 00:47:11,840 --> 00:47:12,840 I agree. 672 00:47:12,840 --> 00:47:20,160 I'm sort of an optimist as a consumer in the AI space, but from an investment side of things, 673 00:47:20,160 --> 00:47:22,920 a lot more cautious. 674 00:47:22,920 --> 00:47:29,760 And you can see it in our DealFlow data, just the spike in number of companies that are 675 00:47:29,760 --> 00:47:40,160 using AI in their pitch deck, because we track our DealFlow and we'll tag the software type, 676 00:47:40,160 --> 00:47:42,320 the industry, things like that. 677 00:47:42,320 --> 00:47:48,440 And I don't know if it's half, but it's spiked dramatically that the number of companies 678 00:47:48,440 --> 00:47:55,400 coming in saying they are in some way related or building AI has just gone through the roof. 679 00:47:55,400 --> 00:48:00,080 And you know, it's just not true because we don't have that much AI, genuine AI talent. 680 00:48:00,080 --> 00:48:06,360 So I think there's a lot of noise and that makes us nervous. 681 00:48:06,360 --> 00:48:14,000 So we typically sit back, do a lot of reading, thinking, let others move first when something 682 00:48:14,000 --> 00:48:15,000 is moving this quickly. 683 00:48:15,000 --> 00:48:19,640 Because frankly, I think it's going to be a lot of mistakes. 684 00:48:19,640 --> 00:48:21,920 Whilst we like risk, we don't like making a lot of mistakes. 685 00:48:21,920 --> 00:48:28,960 So yeah, I'll keep playing with Dali and ChatGVT on my own time, but I doubt we'll be doing 686 00:48:28,960 --> 00:48:29,960 it. 687 00:48:29,960 --> 00:48:33,040 Well, the reason why I like using fund managers is, let's be honest, you guys are substantially 688 00:48:33,040 --> 00:48:36,520 more intelligent than I would ever be in a particular topic. 689 00:48:36,520 --> 00:48:40,840 I'm just a jack of all trades, knowledgeable at everything, but not as much as anything. 690 00:48:40,840 --> 00:48:49,400 But what seems to have me dialed in is the social media platforms, what I want. 691 00:48:49,400 --> 00:48:54,040 Usually I must have been talking about contracts to somebody, or like accidentally maybe just 692 00:48:54,040 --> 00:48:56,320 thinking it and they've tapped my thoughts. 693 00:48:56,320 --> 00:49:01,280 But there's this, I can't remember the app that came up and how they pitched it was, 694 00:49:01,280 --> 00:49:07,620 it's an app created by artificial, by AI, which is essentially like the ChatGVT for 695 00:49:07,620 --> 00:49:09,240 legal negotiating contracts. 696 00:49:09,240 --> 00:49:12,780 Give us a contract, say specifically exactly what you want. 697 00:49:12,780 --> 00:49:16,920 And we'll negotiate as hard or as little as possible, our particular things and give you 698 00:49:16,920 --> 00:49:17,920 options. 699 00:49:17,920 --> 00:49:24,320 I was just so excited until I found out, oh, please put your information in here and we'll 700 00:49:24,320 --> 00:49:29,720 send you an update when it's actually about to work. 701 00:49:29,720 --> 00:49:30,720 And I'm like, well, that's great. 702 00:49:30,720 --> 00:49:33,720 I kind of need it today. 703 00:49:33,720 --> 00:49:41,960 So to me, we're seeing AI, software as a service businesses, there are services like that, 704 00:49:41,960 --> 00:49:45,880 that business owners like myself, that is a viable business. 705 00:49:45,880 --> 00:49:48,160 That there is incredibly helpful. 706 00:49:48,160 --> 00:49:50,480 It can get me a running jump on something. 707 00:49:50,480 --> 00:49:54,560 And then just like when you get sick, you Dr. Google, it doesn't mean I'm right, but 708 00:49:54,560 --> 00:49:58,760 at least it gives me the ability to play with something that I couldn't potentially play 709 00:49:58,760 --> 00:50:04,320 before and then take a couple of versions of what I think and then take that to a professional 710 00:50:04,320 --> 00:50:11,360 who has trained for 400 hours, 1,400 years, whatever it is, to get the advice that's appropriate. 711 00:50:11,360 --> 00:50:16,640 Wouldn't you agree that there is a viable, something that sounds interesting. 712 00:50:16,640 --> 00:50:17,920 Is there anything like that? 713 00:50:17,920 --> 00:50:18,920 Fine. 714 00:50:18,920 --> 00:50:19,920 Is that actually a real business? 715 00:50:19,920 --> 00:50:25,320 It's probably just some dodgy marketing thing on Instagram, but have you seen any businesses 716 00:50:25,320 --> 00:50:32,440 like in the legal practices that would be quite attractive in that particular area? 717 00:50:32,440 --> 00:50:33,440 Not in the AI space. 718 00:50:33,440 --> 00:50:35,440 I know some stuff exists. 719 00:50:35,440 --> 00:50:40,600 I may have seen the same thing as you, the negotiating, the chat GPT for negotiating. 720 00:50:40,600 --> 00:50:42,440 I didn't try it though. 721 00:50:42,440 --> 00:50:48,960 I'm always wary of uploading our legal documents into stuff like that until I know who the 722 00:50:48,960 --> 00:50:54,120 company is and what's behind them because they're capturing that data and no one reads 723 00:50:54,120 --> 00:50:55,120 the Ts and Cs. 724 00:50:55,120 --> 00:50:56,120 What do they do with that? 725 00:50:56,120 --> 00:50:58,280 So I've seen them around. 726 00:50:58,280 --> 00:51:06,280 I know the potential for disruption in the legal industry space from AI is huge, which 727 00:51:06,280 --> 00:51:13,400 is wiring a lot of the younger lawyers that I talk to, but haven't seen any in the flesh. 728 00:51:13,400 --> 00:51:14,400 Interesting. 729 00:51:14,400 --> 00:51:16,920 I didn't even think about that. 730 00:51:16,920 --> 00:51:22,560 Obviously the copyright makes a lot of sense, but anything that's just high service. 731 00:51:22,560 --> 00:51:27,640 What we're seeing in financial planning as well, anything that's high amount of legal 732 00:51:27,640 --> 00:51:32,120 work that can essentially take an eight hour task and turn it into two hours and spit 733 00:51:32,120 --> 00:51:35,200 out something that's highly accurate is a great result. 734 00:51:35,200 --> 00:51:41,600 I think you're making a good point, but there are a lot of different use cases where as 735 00:51:41,600 --> 00:51:47,320 a consumer or a business using the AI service is valuable. 736 00:51:47,320 --> 00:51:50,460 I think that there's absolutely no doubt about that. 737 00:51:50,460 --> 00:51:55,600 From an investor standpoint, I guess the conversation that Raul and I often have or always have 738 00:51:55,600 --> 00:51:59,440 is more on the back end of that. 739 00:51:59,440 --> 00:52:04,400 Who's actually providing the technology that provides the value and how is that monetized 740 00:52:04,400 --> 00:52:08,360 and is that what we're investing in versus the as a consumer, do you get benefit from 741 00:52:08,360 --> 00:52:10,640 using this platform? 742 00:52:10,640 --> 00:52:15,360 Those two things, while they seem similar, I guess the difference comes down to who's 743 00:52:15,360 --> 00:52:19,440 building the technology and who's getting the economic value of having deployed it to 744 00:52:19,440 --> 00:52:20,780 the market. 745 00:52:20,780 --> 00:52:25,640 Do they have the right licensing and the right rights to actually be able to monetize that 746 00:52:25,640 --> 00:52:30,280 particular technology and then own the IP behind it as well? 747 00:52:30,280 --> 00:52:34,560 Those kind of questions that we find ourselves asking, there's absolutely no shortage of 748 00:52:34,560 --> 00:52:40,600 really funky tools on the internet now that are powered by AI that actually have very 749 00:52:40,600 --> 00:52:46,320 decent use cases and they can be quite helpful to your point making things more efficient 750 00:52:46,320 --> 00:52:49,000 or even accessible. 751 00:52:49,000 --> 00:52:51,160 I think you're absolutely right. 752 00:52:51,160 --> 00:52:55,600 There's some really cool stuff out there, but in terms of what we're thinking and what 753 00:52:55,600 --> 00:53:00,280 we're doing, we're just keeping a keen eye out there and I guess analyzing everything 754 00:53:00,280 --> 00:53:05,000 that comes across the desk to try and really understand economic value and business models. 755 00:53:05,000 --> 00:53:07,040 Well, thanks Dan. 756 00:53:07,040 --> 00:53:12,160 AI is always quite interesting, but back to the fund itself. 757 00:53:12,160 --> 00:53:18,800 If anyone wants to learn more about this, the second fund, what's the best way they 758 00:53:18,800 --> 00:53:23,560 can find information or is there anything that we haven't discussed that you think they 759 00:53:23,560 --> 00:53:24,560 might need to know? 760 00:53:24,560 --> 00:53:29,520 Look, I think the best way to reach out to us is probably on LinkedIn. 761 00:53:29,520 --> 00:53:31,040 You can reach out to Rowan and I directly. 762 00:53:31,040 --> 00:53:34,720 I'm always pretty active on LinkedIn to make sure that I get back to any other people that 763 00:53:34,720 --> 00:53:36,480 reach out. 764 00:53:36,480 --> 00:53:40,960 In terms of learning more about our fund and what we're working on and I guess our philosophy, 765 00:53:40,960 --> 00:53:47,920 we have a website that you can access at arborcapital.co that talks a little bit about the philosophy 766 00:53:47,920 --> 00:53:53,320 and in terms of what we're working on at the moment, we are still raising that fund. 767 00:53:53,320 --> 00:54:00,560 It is permanent in nature so annually we do open the books and would love to speak to 768 00:54:00,560 --> 00:54:05,080 investors and family officers that really share our philosophy and would be interested 769 00:54:05,080 --> 00:54:07,960 in having a further conversation. 770 00:54:07,960 --> 00:54:12,480 Last question I'd like finishing on is what keeps you up at night and what gets you out 771 00:54:12,480 --> 00:54:15,480 of bed in the morning? 772 00:54:15,480 --> 00:54:20,180 Jeez, you've got me completely unprepared for that and I've got no idea. 773 00:54:20,180 --> 00:54:21,180 What keeps me up at night? 774 00:54:21,180 --> 00:54:27,080 I think at the minute, Rowan and I have been on a journey of building our business over 775 00:54:27,080 --> 00:54:35,600 the last two years and it's been a tough economic environment and just generally a very tough 776 00:54:35,600 --> 00:54:40,200 environment to have discussions about venture capital and raising funds. 777 00:54:40,200 --> 00:54:47,040 I think that's always been challenging but a challenge worth overcoming and pursuing 778 00:54:47,040 --> 00:54:53,080 so we're pushing forward and doing the best we can in the current environment and maybe 779 00:54:53,080 --> 00:54:55,560 I'll pass to you, Rowan. 780 00:54:55,560 --> 00:55:03,400 I think managing other people's money always keeps you up at night I think to some degree. 781 00:55:03,400 --> 00:55:10,180 I'd be worried if it didn't and getting me up in the morning probably literally and figuratively 782 00:55:10,180 --> 00:55:17,080 my three-year-old and two-year-old get me up in the morning earlier than I would like 783 00:55:17,080 --> 00:55:19,080 but it's worth it. 784 00:55:19,080 --> 00:55:25,400 Well, James, it's great to have you on and really appreciate the insights you've given. 785 00:55:25,400 --> 00:55:27,880 I've learned a lot today. 786 00:55:27,880 --> 00:55:32,800 So with that being said, I wish you the best and I look forward to having you on again. 787 00:55:32,800 --> 00:55:33,800 Awesome. 788 00:55:33,800 --> 00:55:34,800 Thanks, Fels. 789 00:55:34,800 --> 00:55:35,800 Thank you. 790 00:55:35,800 --> 00:55:47,800 Thanks, James. 791 00:55:47,800 --> 00:55:51,760 Any views expressed in this recording do not represent the view of any other third party 792 00:55:51,760 --> 00:55:54,440 and other sole personal opinions of the speaker. 793 00:55:54,440 --> 00:55:58,440 Any reference to financial product does not constitute advice or recommendation and before 794 00:55:58,440 --> 00:56:02,440 any action you should seek proper advice from your financial professional. 795 00:56:02,440 --> 00:56:09,240 Australian listeners should head to www.moneysmart.gov.au to find more information on obtaining financial 796 00:56:09,240 --> 00:56:10,240 advice. 797 00:56:10,240 --> 00:56:32,960 To get in touch with York, head to our website www.yorkwelf.com.au.